The FTSE 350 mining index sunk by as much as 6.8pc to 6,990 - its biggest daily drop for since September 28 - amid a global commodity price rout which has put the sector under increased pressure to slash capital expenditure and operational costs.
The index is now at its lowest level since August 2004, when it hit 6,899.
Investors fled to the sidelines as iron ore slumped to a decade low - falling below the $40 a tonne mark - in early trade and copper also slipped 0.1pc after weak data from China reignited fears about weak demand.
In November, Chinese exports fell by 6.8pc for a fifth consecutive month, while a slump in imports of 8.7pc extended for a record thirteenth month.
In the face of collapsing commodity prices and renewed concerns about the health of the Chinese economy, the mining-heavy FTSE 100 was dragged 1.2pc lower to 6,149 - its biggest one day drop since the European Central bank’s stimulus measures disappointed last week.
- Chinese stocks slump after weak trade data as yuan heads for four-year low
Shares in international miner Glencore touched their lowest level since September 28, when analysts at Investec warned the stock could be worthless if commodity prices continued to fall. The FTSE 100 stock is currently changing hands at 78.9p - down 7.7pc.
Peter Ward, of London Capital Group, said: “Given Glencore’s move below the £1 marker it will be difficult to clamber back with commodity prices as pressured despite the plans to cut output and jobs.”
Meanwhile, Anglo American hit an all-time low of 332.4p - 9.9pc lower - as it became the latest miner to announce the suspension of its dividends until the end of 2016. It also said it would overhaul its business by slashing its workforce from 135,000 to 50,000.
However, the decision to cull its dividend came after HSBC warned it would burn at least $2.7bn if it were to maintain its dividend, as it cautioned investors further cost cutting would not be sufficient to ease the miner’s pain.
Shares in Rio Tinto also tumbled 6.4pc to £19.34 after it too announced a fresh round of spending cuts as it battles the collapse in commodity prices.
BHP Billiton fell to its lowest level in seven years, 6.3pc lower at 717.4p - as the repercussions of the deadly dam burst in Brazil in October continued to plague the miner. Brazil’s National Humanitarian Society has filed a civil lawsuit seeking $5.31bn in damages from the mine operator Samarco and its owners, BHP and Vale SA.
Two weeks ago JPMorgan Cazenove cautioned investors the bursting of the Samarco dam in Brazil could prove to be “the straw that breaks the camel’s back on BHP’s progressive dividend.”
With Britain’s benchmark index firmly in the red, those hoping for a Santa rally may be left disappointed as mining stocks continue their downward spiral.
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